CIA Maritima V. Insurance Co.

Of North America (1964)

G.R. No. L-18965 October 30, 1964

Lessons Applicable: Actionable Document (Transportation)

FACTS:
October, 1952: Macleod and Company of the Philippines (Macleod) contracted by
telephone the services of the Compaia Maritima (CM), a shipping corporation, for:
shipment of 2,645 bales of hemp from the Macleod's Sasa private pier at Davao City to
Manila
subsequent transhipment to Boston, Massachusetts, U.S.A. on board the S.S. Steel
Navigator.
This oral contract was later on confirmed by a formal and written booking issued by
Macleod's branch office in Sasa and handcarried to CM's branch office in Davao in
compliance with which the CM sent to Macleod's private wharf LCT Nos. 1023 and 1025
on which the loading of the hemp was completed on October 29, 1952.
The 2 lighters were manned each by a patron and an assistant patron.
The patrons of both barges issued the corresponding carrier's receipts and that issued
by the patron of Barge No. 1025 reads in part:
Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD AND
COMPANY OF PHILIPPINES, Sasa Davao, for transhipment at Manila onto S.S. Steel
Navigator.
FINAL DESTINATION: Boston.
Early hours of October 30: LCT No. 1025 sank, resulting in the damage or loss of 1,162
bales of hemp loaded therein
Macleod promptly notified the carrier's main office in Manila and its branch in Davao
advising it of its liability
The damaged hemp was brought to Odell Plantation in Madaum, Davao, for cleaning,
washing, reconditioning, and redrying.
total loss adds up to P60,421.02
All abaca shipments of Macleod were insured with the Insurance Company of North
America against all losses and damages
Macleod filed a claim for the loss it suffered with the insurance company and was paid
P64,018.55
subrogation agreement between Macleod and the insurance company wherein the
Macleod assigned its rights over the insured and damaged cargo
October 28, 1953.: failing to recover from the carrier P60,421.02 (amount supported by
receipts), the insurance company instituted the present action
CA affirmed RTC: ordering CM to pay the insurance co.
ISSUE: W/N there was a contract of carriage bet. CM (carrier) and Macleod (shipper)

HELD: YES. Affirmed

receipt of goods by the carrier has been said to lie at the foundation of the contract to
carry and deliver, and if actually no goods are received there can be no such contract
The liability and responsibility of the carrier under a contract for the carriage of goods
commence on their actual delivery to, or receipt by, the carrier or an authorized agent.
... and delivery to a lighter in charge of a vessel for shipment on the vessel, where it is
the custom to deliver in that way
 Whenever the control and possession of goods passes to the carrier and nothing
remains to be done by the shipper, then it can be said with certainty that the relation of
shipper and carrier has been established
As regards the form of the contract of carriage it can be said that provided that there is
a meeting of the minds and from such meeting arise rights and obligations, there should
be no limitations as to form
The bill of lading is not essential
Even where it is provided by statute that liability commences with the issuance of the
bill of lading, actual delivery and acceptance are sufficient to bind the carrier
marine surveyors, attributes the sinking of LCT No. 1025 to the 'non-water-tight
conditions of various buoyancy compartments

Facts:
1. Clara UyBico and AmparoServando loaded on board a vessel of Philippine Steam
Navigation Co. for carriage from Manila to Negros Occidental 1,528 cavans of rice and 44
cartons of colored paper, toys and general merchandise.
2. The contract of carriage of cargo was evidenced by a Bill of Lading (B/L). There was a
stipulation limiting the responsibility of the carrier for loss or damage that may be caused to
the shipment
a. carrier shall not be responsible for loss or damage to shipments billed owners risk
unless such loss or damage is due to the negligence of the carrier. Nor shall the carrier be
responsible for loss or damage caused by force majeure, dangers or accidents of the sea,
war, public enemies, fire.
3. Upon arrival of the vessel at its destination, the cargoes were discharged in good
condition and placed inside the warehouse of the Bureau of Customs.
4. UyBico was able to take delivery of 907 cavans of rice.
5. Unfortunately, the warehouse was razed by fire of unknown origin later that same day
destroying the remaining cargoes.
6. UyBico and Servando filed a claim for the value of the goods against the carrier.
7. The lower court ruled in their favor. It held that the delivery of the shipment to the
warehouse is not the delivery contemplated by Art. 1736 of the CC. And since the burning of
the warehouse occurred prior to the actual or constructive delivery of the goods, the loss is
chargeable against the vessel.
Issue:Whether or not the carrier is liable for the loss of the goods.

Held:No.

1. Article 1736 of the CC imposes upon common carriers the duty to observe extraordinary
diligence from the moment the goods are unconditionally placed in their possession "until
the same are delivered, actually or constructively, by the carrier to the consignee or to the
person who has a right to receive them, without prejudice to the provisions of Article 1738.
The court a quo held that the delivery of the shipment in question to the warehouse of the
Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning
of the warehouse occurred before actual or constructive delivery of the goods to the
appellees, the loss is chargeable against the appellant.
2. It should be pointed out, however, that in the bills of lading issued for the cargoes in
question, the parties agreed to limit the responsibility of the carrier. The stipulation is valid
not being contrary to law, morals or public policy.
3. The petitioners however, contend that the stipulation does not bind them since it was
printed at the back of the B/L and that they did not sign the same. However, as the Court
held in OngYiu vs. CA, while it may be true that a passenger had not signed the plane ticket,
he is nevertheless bound by the provisions thereof. Such provisions have been held to be a
part of the contract of carriage, and valid and binding upon the passenger regardless of the
latter's lack of knowledge or assent to the regulation.
4. Also, where fortuitous event is the immediate and proximate cause of the loss, the
obligor is exempt from liability for non-performance.In the case at bar, the burning of the
customs warehouse was an extraordinary event which happened independently of the will
of the appellant. The latter could not have foreseen the event.
5. There is nothing in the record to show that the carrier incurred in delay in the
performance of its obligation. It appears that it had not only notified UyBico and Servando
of the arrival of their shipment, but had demanded that the same be withdrawn. In fact,
pursuant to such demand, UyBico had taken delivery of 907 cavans of rice before the
burning of the warehouse.
6. Nor can the carrier or its employees be charged with negligence. The storage of the
goods in the Customs warehouse pending withdrawal thereof by UyBico and Servando was
undoubtedly made with their knowledge and consent. Since the warehouse belonged to and
was maintained by the government, it would be unfair to impute negligence to the carrier,
the latter having no control whatsoever over the same.

Samar Mining Co., Inc. vs Nordeutscher Lloyd (G.R. No. L-28673, 1984)

FACTS:

The case arose from an importation made by Samar Mining Co. Inc. of 1 crate Optima
welded wedge wire sieves through the M/S Schwabenstein, a vessel owned by
Nordeutscher Lloyd, (represented in the Philippines by its agent, C.F. Sharp & Co., Inc.),
which shipment is covered by Bill of Lading No. 18 duly issued to consignee Samar Mining.
Upon arrival of the vessel at the port of Manila, the importation was unloaded and delivered
in good order and condition to the bonded warehouse of AMCYL. The goods were however
never delivered to, nor received by, the consignee at the port of destination Davao.
When the letters of complaint sent to Nordeutscher Lloyd failed to elicit the desired
response, Samar Mining filed a formal claim for P1,691.93, the equivalent of $424.00 at the
prevailing rate of exchange at that time, against the former, but neither paid.
Samar Mining filed a suit to enforce payment. Nordeutscher Lloyd and CF Sharp & Co.
brought in AMCYL as third party defendant. The trial court rendered judgment in favor of
Samar Mining, ordering Nordeutscher Lloyd, et. al. to pay the amount of P1,691.93 plus
attorneys fees and costs. However, the Court stated that Nordeutscher Lloyd, et. al. may
recoup whatever they may pay Samar Mining by enforcing the judgment against third party
defendant AMCYL, which had earlier been declared in default. Nordeutscher Lloyd and C.F.
Sharp & Co. appealed from said decision.

Notes

The following are the pertinent ports, as provided in the bill of lading:
Port of Loading: Bremen, Germany
Port of discharge from ship: Manila
Port of destination/Port of discharge of the goods: Davao

As plainly indicated on the face of the bill, the vessel M/S Schwabenstein is to transport the
goods only up to Manila. Thereafter, the goods are to be transshipped by the carrier to the
port of destination.

ISSUE:
Whether or not a stipulation in the bill of lading exempting the carrier from liability for loss
of goods not in its actual custody (i.e., after their discharge from the ship) is valid.

HELD:

It is clear that in discharging the goods from the ship at the port of Manila, and delivering
the same into the custody of AMCYL, the bonded warehouse, appellants were acting in full
accord with the contractual stipulations contained in Bill of Lading No. 18. The delivery of
the goods to AMCYL was part of appellants' duty to transship (meaning to transfer for
further transportation from one ship or conveyance to another) the goods from Manila to
their port of destination-Davao.

The extent of appellant carrier's responsibility and/or liability in the transshipment of the
goods in question are spelled out and delineated under Section 1, paragraph 3 of Bill of
Lading No. 18, to wit: the carrier shall not be liable in any capacity whatsoever for any
delay, loss or damage occurring before the goods enter ship's tackle to be loaded or after
the goods leave ship's tackle to be discharged, transshipped or forwarded. Further, in
Section 11 of the same bill, it was provided that this carrier, in making arrangements for
any transshipping or forwarding vessels or means of transportation not operated by this
carrier shall be considered solely the forwarding agent of the shipper and without any other
responsibility whatsoever even though the freight for the whole transport has been
collected by him Pending or during forwarding or transshipping the carrier may store the
goods ashore or afloat solely as agent of the shipper

We find merits in Nordeutschers contention that they are not liable for the loss of the
subject goods by claiming that they have discharged the same in full and good condition
unto the custody of AMCYL at the port of discharge from ship Manila, and therefore,
pursuant to the aforequoted stipulation (Sec. 11) in the bill of lading, their responsibility for
the cargo had ceased.The validity of stipulations in bills of lading exempting the carrier from
liability for loss or damage to the goods when the same are not in its actual custody has
been upheld by Us in PHOENIX ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22 SCRA 674
(1968), ruling that pursuant to the terms of the Bill of Lading, appellee's responsibility as a
common carrier ceased the moment the goods were unloaded in Manila and in the matter
of transshipment, appellee acted merely as an agent of the shipper and consignee

In the present case, by the authority of the above pronouncements, and in conformity with
the pertinent provisions of the Civil Code, Section 11 of Bill of Lading No. 18 and the third
paragraph of Section 1 thereof are valid stipulations between the parties insofar as they
exempt the carrier from liability for loss or damage to the goods while the same are not in
the latter's actual custody.

Acareful perusal of the provisions of the New Civil Code on common carriers directs our
attention to Article 1736, which reads: The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right to receive
them, without prejudice to the provisions of article 1738. In relation to this, Article 1738
provides: the extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at the place of
destination, until the consignee has been advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove them or otherwise dispose of them.

Art. 1738 finds no applicability to the instant case. The said article contemplates a situation
where the goods had already reached their place of destination and are stored in the
warehouse of the carrier. The subject goods were still awaiting transshipment to their port
of destination, and were stored in the warehouse of a third party when last seen and/or
heard of. However, Article 1736 is applicable to the instant suit. Under said article, the
carrier may be relieved of the responsibility for loss or damage to the goods upon actual or
constructive delivery of the same by the carrier to the consignee, or to the person who has a
right to receive them. There is actual delivery in contracts for the transport of goods when
possession has been turned over to the consignee or to his duly authorized agent and a
reasonable time is given him to remove the goods. In the present case, there was actual
delivery to the consignee through its duly authorized agent, the carrier.

Lastly, two undertakings are embodied in the bill of lading: the transport of goods from
Germany to Manila, and the transshipment of the same goods from Manila to Davao, with
Samar Mining acting as the agent of the consignee. The moment the subject goods are
discharged in Manila, Samar Minings personality changes from that of carrier to that of
agent of the consignee. Such being the case, there was, in effect, actual delivery of the
goods from appellant as carrier to the same appellant as agent of the consignee. Upon such
delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss or damage
that may befall the goods from that point onwards. This is the full import of Article 1736.

But even as agent of the consignee, the appellant cannot be made answerable for the value
of the missing goods. It is true that the transshipment of the goods, which was the object of
the agency, was not fully performed. However, appellant had commenced said
performance, the completion of which was aborted by circumstances beyond its control. An
agent who carries out the orders and instructions of the principal without being guilty of
negligence, deceit or fraud, cannot be held responsible for the failure of the principal to
accomplish the object of the agency.

LU DO & LU YM CORPORATION vs. I. V. BINAMIRA

BAUTISTA ANGELO, J./April 22, 1957

Facts:
Seller - Delta Photo Supply Company of New York
Agent of carrier - Lu do & Lu Yu Corp
Buyer - I. V. Binamira
Arrastre - Visayan Cebu Terminal Company, Inc
Stevedoring - Cebu Stevedoring Company, Inc.
Marine surveyors - R. J. del Pan & Company, Inc
Delta Photo Supply Company of New York shipped on board the M/S FERNSIDE at New York,
6 cases of films and photographic supplies consigned to the order of I. V. Binamira. For this
shipment, Bill of Lading was issued.
The ship arrived at the port of Cebu and cargo was discharged including the shipment in
question, placing it in the possession and custody of the arrastre operator.
Petitioner hired a stevedoring company to unload its cargo. During the discharge, good order
cargo was separated from the bad order cargo on board the ship, and a separate list of bad
order cargo was prepared by the checker of the stevedoring company. All the cargo unloaded
was received at the pier by the arrastre operator of the port. The terminal company had also
its own checker who also recorded and noted down the good cargo from the bad one.
The shipment in question, was not included in the report of bad order cargo of both checkers,
indicating that it was discharged from the, ship in good order and condition.
3 days after the goods were unloaded from the ship, respondent took delivery of his 6 cases
of photographic supplies from the arrastre operator. He discovered that the cases showed
signs of pilferage.
Respondent hired marine surveyors, to examine them. The surveyors examined the cases and
made a physical count of their contents in the presence of representatives of petitioner,
respondent and the stevedoring company. The finding of the surveyors showed that some
films and photographic supplies were missing valued at P324.63.

TC: Liable to pay

CA: affirmed
> Delivery to the customs authorities is not the delivery contemplated by Article 1736 because,
in such a case, the goods are then still in the hands of the Government and their owner could
not exercise dominion whatever over them until the duties are paid.
Issue: WON the carrier is responsible for the loss considering that the same occurred after the
shipment was discharged from the ship and placed in the possession and custody of the
customs authorities?

Held: NOT LIABLE

Ratio:
1. As a rule, a common carrier is responsible for the loss, destruction or deterioration of the
goods it assumes to carry from one place to another unless the same is due to any to any of
the causes mentioned in Article 1734 and that, if the goods are lost, destroyed or deteriorated,
for causes other that those mentioned, the common carrier is presumed to have been at fault
or to have acted negligently, unless it proves that it has observed extraordinary diligence in
their care and that this extraordinary liability lasts from the time the goods are placed in the
possession of the carrier until they are delivered to the consignee, or "to the person who has
the right to receive them"
2. These provisions, however, only apply when the loss, destruction or deterioration takes
place while the goods are in the possession of the carrier, and not after it has lost control of
them.
3. The reason is that while the goods are in its possession, it is but fair that it exercise
extraordinary diligence in protecting them from damage, and if loss occurs, the law presumes
that it was due to its fault or negligence. This is necessary to protect the interest the interest
of the owner who is at its mercy. The situation changes after the goods are delivered to the
consignee.
4. The parties may agree to limit the liability of the carrier considering that the goods have still
to through the inspection of the customs authorities before they are actually turned over to
the consignee. This is a situation where the carrier losses control of the goods because of a
custom regulation and it is unfair that it be made responsible for what may happen during the
interregnum.
5. In the bill of lading that was issued covering the shipment, both the carrier and the consignee
have stipulated to limit the responsibility of the carrier for the loss or damage that may
because to the goods before they are actually delivered.1

1Stipulations:
1. . . . The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or misdelivery, or loss of or damage to the goods
occurring while the goods are not in the actual custody of the Carrier. . . .
2. . . . The responsibility of the Carrier in any capacity shall altogether cease and the goods shall be considered to be delivered and at their own
risk and expense in every respect when taken into the custody of customs or other authorities. The Carrier shall not be required to give any
notification of disposition of the goods. . . .
3. Any provisions herein to the contrary notwithstanding, goods may be . . . by Carrier at ship's tackle . . . and delivery beyond ship's tackle shall
been tirely at the option of the Carrier and solely at the expense of the shipper or consignee.
 6. The stipulations are clear. They have been adopted precisely to mitigate the responsibility
of the carrier nothing therein that is contrary to morals or public policy that may justify their
nullification.

Eastern Shipping Lines, Inc. v. CA and The First Nationwide Assurance Corp.
G.R. No. 97412 July 12, 1994
Vitug, J.

FACTS:
13 coils of uncoated 7-wire stress relieved wire strand for pre-stressed concrete were shipped
on board a vessel owned and operated by Eastern Shipping Lines at Kobe, Japan, for delivery
to Stresstek Post-Tensioning Phils., Inc. in Manila
while en route from Kobe to Manila, the carrying vessel encountered very rough seas and
stormy weather; the coils wrapped in burlap cloth and cardboard paper were stored in the
lower hold of the hatch of the vessel which was flooded with water; the water entered the
hatch when the vessel encountered heavy weather en route to Manila; upon request, a survey
of bad order cargo was conducted at the pier in the presence of the representatives of the
consignee and E. Razon, Inc. and it was found that 7 coils were rusty on one side each; upon
survey conducted at the consignees warehouse it was found that the wetting of the cargo was
caused by fresh water that entered the hatch when the vessel encountered heavy weather; all
13 coils were extremely rusty and totally unsuitable for the intended purpose
The First Nationwide Assurance Corp. indemnified the consignee in the amount of P171,923.00
for damage and loss to the insured cargo

ISSUE: WON Eastern Shipping Lines is liable

HELD: Yes.
under Art. 1733, common carriers are bound to observe extra-ordinary vigilance over goods
according to all circumstances of each case
Art. 1735: In all cases other than those mentioned in Art. 1734, if the goods are lost, destroyed
or deteriorated, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence
Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or
negligence on the part of the carrier applies; and the carrier must present evidence that it has
observed the extraordinary diligence required by Article 1733 of the Civil Code in order to
escape liability for damage or destruction to the goods that it had admittedly carried in this
case. But no evidence was presented; hence, the carrier cannot escape liability.
MACAM vs. COURT OF APPEALS GR No. 125524; August 25, 1999
Thursday, January 29, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Commercial Law

Facts: Benito Macam, doing business under name Ben-Mac Enterprises, shipped on
board vessel Nen-Jiang, owned and operated by respondent China Ocean Shipping Co. through
local agent Wallem Philippines Shipping Inc., 3,500 boxes of watermelon covered by Bill of
Lading No. HKG 99012, and 1,611 boxes of fresh mangoes covered by Bill of Lading No. HKG
99013. The shipment was bound for Hongkong with PAKISTAN BANK as consignee and Great
Prospect Company of Rowloon (GPC) as notify party.

Upon arrival in Hongkong, shipment was delivered by respondent WALLEM directly to GPC, not
to PAKISTAN BANK and without the required bill of lading having been surrendered.
Subsequently, GPC failed to pay PAKISTAN BANK, such that the latter, still in possession of
original bill of lading, refused to pay petitioner thru SOLIDBANK. Since SOLIDBANK already pre-
paid the value of shipment, it demanded payment from respondent WALLEM but was refused.
MACAM constrained to return the amount paid by SOLIDBANK and demanded payment from
WALLEM but to no avail.

WALLEM submitted in evidence a telex dated 5 April 1989 as basis for delivering the cargoes to
GPC without the bills of lading and bank guarantee. The telex instructed delivery of
various shipments to the respective consignees without need of presenting the bill of lading and
bank guarantee per the respective shippers request since for prepaid shipt ofrt charges already
fully paid. MACAM, however, argued that, assuming there was such an instruction, the
consignee referred to was PAKISTAN BANK and not GPC.

The RTC ruled for MACAM and ordered value of shipment. CA reversed RTCs decision.

Issue: Are the respondents liable to the petitioner for releasing the goods to GPC without the
bills of lading or bank guarantee?

Held: It is a standard maritime practice when immediate delivery is of the essence, for shipper to
request or instruct the carrier to deliver the goods to the buyer upon arrival at the port of
destination without requiring presentation of bill of lading as that usually takes time. Thus, taking
into account that subject shipment consisted of perishable goods and SOLIDBANK pre-paid the
full amount of value thereof, it is not hard to believe the claim of respondent WALLEM that
petitioner indeed requested the release of the goods to GPC without presentation of the bills of
lading and bank guarantee.

To implement the said telex instruction, the delivery of the shipment must be to GPC, the notify
party or real importer/buyer of the goods and not the PAKISTANI BANK since the latter can very
well present the original Bills of Lading in its possession. Likewise, if it were the PAKISTANI BANK
to whom the cargoes were to be strictly delivered, it will no longer be proper to require a bank
guarantee as a substitute for the Bill of Lading. To construe otherwise will render meaningless
the telex instruction. After all, the cargoes consist of perishable fresh fruits and immediate
delivery thereof the buyer/importer is essentially a factor to reckon with.

We emphasize that the extraordinary responsibility of the common carriers lasts until actual or
constructive delivery of the cargoes to the consignee or to the person who has a right to receive
them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the
notify party. However, in the export invoices GPC was clearly named as buyer/importer.
Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his
complaint before the trial court. Thispremise draws us to conclude that the delivery of the
cargoes to GPC as buyer/importer which, conformably with Art. 1736 had, other than the
consignee, the right to receive them was proper.

VOL. 131, AUGUST 24, 1984

365
Metro Port Service, Inc. vs. Court of Appeals
No. L-57582. August 24, 1984.*
METRO PORT SERVICE, INC., (Formerly E. Razon, Inc.), petitioner-appellant, vs. COURT OF
APPEALS and CHARTER INSURANCE CO., INC., respondents-appellees.
Remedial Law; Special Civil Actions; Petition for Review on Certiorari; Supreme Court; Only
questions of law may be raised in a Petition for Review on Certiorari; General rule that findings
of fact of Court of Appeals are conclusive on the Supreme Court; Exceptions, when the findings
of fact of the Court of Appeals are contrary to those of the trial court and are contradicted by the
evidence. Ordinarily, in a Petition for Review on Certiorari, only questions of law may be raised.
And, this Court has held in a number of cases that findings of fact by the Court of Appeals are, in
general, conclusive on the Supreme Court when supported by the evidence on record. The rule
is not absolute, however, and allows of exceptions, which we find present in the case at bar in
that respondent Courts findings of facts
_______________

* FIRST DIVISION.
366
366
SUPREME COURT REPORTS ANNOTATED
Metro Port Service, Inc. vs. Court of Appeals
are contrary to those of the Trial Court and are contradicted by the evidence on record.
Mercantile Law; Carriage of Goods by Sea Act; Insurance; Liability of carrier over goods
discharged by it in bad order condition, and of the arrastre operator for goods damaged under
its custody; Admitted liability of arrastre operator adjudged by the trial court, cannot be modified
for insurers failure to appeal it.Since 619 bags were discharged from the CARRIER already in
bad order condition, it follows that the remaining 431 bags were damaged while in the
ARRASTREs custody for which it should be held liable. However, since the Trial Court computed
the liability of the ARRASTRE at 351 bags, notwithstanding the ARRASTREs admission that 80
bags were not included in the bad order cargo certificate, and the INSURER did not appeal said
award by the Trial Court in its desire to have the case terminated soonest, the INSURER may not,
in this appeal, have the judgment modified. The liability of the ARRASTRE for P9,763.94 fixed by
the Trial Court is thus in order.
PETITION to review the decision and resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

Silverio B. De Leon for petitioner-appellant.
Manuel L. Villamayor, Ramirez, Villamayor & Associates for respondent Charter Insurance Co.,
Inc.
MELENCIO HERRERA, J.:

Petitioner seeks a review of the Decision, and Resolution denying reconsideration, of the then
Court of Appeals in CA-G.R. No. 63087-R entitled The Charter Insurance Co., Inc. vs. Universal
Shipping Lines, Inc. and E. Razon, Inc..
The following are the established facts: Sometime in April 1973, Union Sales Marketing
Corporation (UNION) ordered from Union Carbide of Antwerp, Belgium, 99,540 kilograms of Low
Density Polyethylene, valued at US $.245 per kilogram or a total purchase price of US $24,417.30
(Exhibits D & F), at the conversion rate of P6.848 to a US Dollar (Exhibit E).
The shipment was packed in 4,000 bags of 25 net kilograms, more or less, for each bag, and was
loaded at Antwerp,
367
VOL. 131, AUGUST 24, 1984
367
Metro Port Service, Inc. vs. Court of Appeals
Belgium, in good order condition on board the S/S Dingalan Bay, owned and operated by
Universal Shipping Lines, Inc. (CARRIER) and consigned to UNION in Manila. The shipment was
covered by a Marine Risk Note (Exhibit B) issued by Charter Insurance Co. (INSURER) for
P212,738.17 against all risks. The CARRIER arrived in Manila on June 22, 1973 and arrastre
services were handled by E. Razon, Inc. (ARRASTRE), now called Metro Port Service, Inc.
It is not disputed that out of the 4,000 bags, 1,050 bags were received by the consignee UNION
in bad order condition (Exhibits I to I-5; Exhibits 22 to 27).1 As a consequence of the
damage and loss, the INSURER paid UNION the sum of P35,709.11 in full settlement of the claim,
and the INSURER became the subrogee of all of UNIONS rights to recover from the parties
concerned.
On July 1, 1974, the INSURER sued for damages with the then Court of First Instance of Manila
against the CARRIER and the ARRASTRE in the amount of P35,709.11, in addition to exemplary
damages and attorneys fees.
Both defendants disclaimed liability, each one attributing the loss to the other.
In its Decision, the Trial Court allocated payment of liabilities as follows:
WHEREFORE, defendant Universal Shipping Lines, Inc., is ordered to pay plaintiff the amount of
P12,285.94 plus 12% interest per annum from July 1, 1974 until full payment thereof.
Defendant E. Razon, Inc., is ordered to pay plaintiff the amount of P9,763.94 plus 12% interest
per annum from July 1, 1974 until full payment thereof.
Both defendants are ordered to pay the costs.
Both defendants also are jointly and severally liable to pay plaintiff P2,000.00 as attorneys
fees.2
On appeal by the CARRIER and ARRASTRE, the then Court of Appeals, on March 23, 1981,
absolved the CARRIER
_______________

1 T.s.n., February 24, 1976, p. 6; t.s.n., April 6, 1977, p. 28.

2 Record on Appeal, p. 23.
368
368
SUPREME COURT REPORTS ANNOTATED
Metro Port Service, Inc. vs. Court of Appeals
of any and all liability and held the ARRASTRE solely liable.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is hereby
MODIFIED as follows:
1. Defendant E. Razon, Inc., is hereby directed to pay to plaintiff, the total sum of P22,049.88,
plus interest of 12% interest per annum from July 1, 1974 until the sum is fully paid;
2. Dismissing the complaint as against defendant Universal Shipping Lines, Inc.;
3. Defendant E. Razon, Inc., to pay costs under the complaint of plaintiff;
4. Plaintiff to pay costs by reason of its complaint against defendant Universal Shipping Lines, Inc.
Appellant E. Razon to pay costs of this appeal on its appeal against plaintiff-appellant;
Appellee to pay costs of this appeal to appellant Universal Shipping Lines, Inc.3
Reconsideration filed by the ARRASTRE was denied by the Appellate Court.4
Before us now, the ARRASTRE assails the appealed judgment in that 1) it did not give credence
and belief to the ARRASTREs Bad Order Certificates (Exhibits 22 to 27-Razon), and 2) it erred
in holding the ARRASTRE liable.5
Ordinarily, in a Petition for Review on Certiorari, only, questions of law may be raised.6 And, this
Court has held in a number of cases that findings of fact by the Court of Appeals are, in general,
conclusive on the Supreme Court when supported by the evidence on record.7 The rule is not
absolute, however, and allows of exceptions, which we find present in the case at bar in that
respondent Courts findings of facts are contrary to those of the Trial Court and are contradicted
by the
_______________

3 Rollo, pp. 28 & 28-A.

4 Ibid., p. 38.
5 Petition, p. 5.
6 Section 2, Rule 45, Rules of Court.
7 Vda. de Dela Cruz vs. Court of Appeals, 88 SCRA 695 (1979); Alsua-Betts vs. Court of Appeals,
92 SCRA 332 (1979).
369
VOL. 131, AUGUST 24, 1984
369
Metro Port Service, Inc. vs. Court of Appeals
evidence on record.8
In absolving the CARRIER, respondent Court stated:
When the shipment was discharged from the carrying vessel, there were 443 bags of shipment
which were broken at the ends. In other words, only the end-portions of the 443 bags were torn
or broken, without any showing that any portion of the contents of these 443 bags was spilled or
spoiled. x x x and no loss or spoilage of the shipment having been proved or shown to have
occurred when the shipment was under the care and custody of the vessel, then the vessel can
and should not be held liable to answer for the loss of any part of it that was found upon the
discharge of the shipment from the Arrastre Operators care and custody into the consignees
Broker.
x x x The trial court found the value of the losses at P22,049.88. Now, since the losses are shown
to have occurred after the Arrastre Operator had received the entire shipment of 4,000 bags
from the vessel, then it can be safely assumed that the losses occurred while the shipment was
in the care and custody of the Arrastre Operator. The appellant E. Razon, Inc., should, therefore,
be liable to pay for the whole claim.9
The foregoing completely disregards the evidence of the CARRIER and the ARRASTRE that 619
bags were discharged by the CARRIER to the ARRASTRE in bad order condition, as evidenced by
the original and duplicate copies of the Cargo Receipts issued by the CARRIER to the ARRASTRE
and signed by their respective representatives (Exhibits 1-DDDD to 1-HHHH; Exhibits 2 to
2-D-Razon).10 The condition of the 619 bags before the turnover to the ARRASTRE from the
CARRIER was loss or spoilage of up to 50%, as reflected in the Survey of Bad Order Cargoes, signed
by the CARRIER and ARRASTRE representatives (Exhibits 1 to 1-D Razon; Exhibits 2 to 2-
C-Universal).11 Accordingly, the Trial Court held the CARRIER liable only for the value of a total
of 443 bags, as this is the
_______________

8 Macadangdang vs. Court of Appeals, 100 SCRA 73 (1980); Manero vs. Court of Appeals, 102
SCRA 817 (1981).
9 Rollo, pp. 27 & 28.
10 T.s.n., April 6, 1977, pp. 14, 27, 28, 31 & 42.
11 T.s.n., April 6, 1977, pp. 14, 15, 31, 39 & 42.
370
370
SUPREME COURT REPORTS ANNOTATED
Metro Port Service, Inc. vs. Court of Appeals
evidence of the plaintiff (INSURER), at 16.8209 kilograms per bag,12 less than the actual weight
of 25 kilograms net per bag (Exhibit D; Exhibits 1 to 1-C-Razon) due to some recovery of
spillage, or a total liability of P12,285.94.
Since 619 bags were discharged from the CARRIER already in bad order condition, it follows that
the remaining 431 bags were damaged while in the ARRASTREs custody for which it should be
held liable. However, since the Trial Court computed the liability of the ARRASTRE at 351 bags,
notwithstanding the ARRASTREs admission that 80 bags were not included in the bad order
cargo certificate,13 and the INSURER did not appeal said award by the Trial Court in its desire to
have the case terminated soonest,14 the INSURER may not, in this appeal, have the judgment
modified.15 The liability of the ARRASTRE for P9,763.94 fixed by the Trial Court is thus in order.
WHEREFORE, the appealed judgment of respondent Court of Appeals is hereby REVERSED and
SET ASIDE, and that of the Court of First Instance of Manila, Branch XI, is hereby reinstated. No
costs.
SO ORDERED.
Teehankee, Actg. C.J., Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.
Judgment reversed and set aside.
Notes.A contractor which renders services covering the handling of cargoes at piers and
wharves is an arrastre operator. (Visayan Cebu Terminal Co., Inc. vs. Commissioner of Internal
Revenue, 13 SCRA 357.)
It is the duty of the arrastre operator to present the tally receipts in complaints for short-delivery
and failure to do so
_______________

FIREMANS FUND INSURANCE CO vs METRO PORT SERVICES

FACTS:
Vulcan Industrial and Mining Corporation imported from the United States several machineries
and equipment which were loaded on board the SIS Albert Maersk at the port of Philadelphia,
U.S.A., and transhipped for Manila through the vessel S/S Maersk Tempo.
The shipment arrived at the port of Manila on June 3, 1979 and was turned over complete and
in good order condition to the arrastre operator E. Razon Inc. (now Metro Port Service Inc. and
referred to as the ARRASTRE).
A tractor operator, named Danilo Librando and employed by the ARRASTRE, was ordered to
transfer the shipment to the Equipment Yard at Pier 3. While Librando was maneuvering the
tractor (owned and provided by Maersk Line) to the left, the cargo fell from the chassis and hit
one of the container vans of American President Lines. It was discovered that there were no twist
lock at the rear end of the chassis where the cargo was loaded.
An Insurance was claimed by Vulcan Industrial, in turn, the petitioner insurance company
demanded recovery from Maerks Line. The trial court ruled that Maerks and Metro Port be held
solidarily liable. On appeal by Metro Port, the Court of Appeals reversed, ruling that it is only
Maerks that is liable.
ISSUE:
WON Maerks and Metro Port exercised the proper degree of diligence.
WON Maerks and Metro Port be held liable solidarity.

RULING:
Maerks and Metro port did not exercise the proper diligence.
In general, the nature of the work of an arrastre operator covers the handling of cargoes at piers
and wharves. The ARRASTRE is required to provide cargo handling equipment which includes
among others trailers, chassis for containers. In some cases, however, the shipping line has its
own cargo handling equipment.
In this case, Maerks provide for the chassis and tractors and merely requested the arrastre
(Metro) to dispatch a tractor operator. ARRASTRE which had the sole discretion and prerogative
to hire and assign Librando to operate the tractor. It was also the ARRASTRE's sole decision to
detail and deploy Librando for the particular task from among its pool of tractor operators or
drivers. Since the ARRASTRE offered its drivers for the operation of tractors in the handling of
cargo and equipment, then the ARRASTRE should see to it that the drivers under its employ must
exercise due diligence in the performance of their work.
The testimonies are appreciated and the court held that Maerks is at fault in not providing twist
locks on the chassis and Metro is also at fault for Librandos negligence in not checking that the
cargo is securely loaded on the chassis.
Both the arrastre and the carrier are charged with and obligated to deliver the goods in good
condition to the consignee.
The legal relationship between the consignee and the arrastre operator is akin to that of a
depositor and warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]). The
relationship between the consignee and the common carrier is similar to that of the consignee
and the arrastre operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil. 253 [1960]). Since
it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver
them in good condition to the consignee, such responsibility also devolves upon the CARRIER.
Both the ARRASTRE and the CARRIER are therefore charged with and obligated to deliver the
goods in good condition to the consignee.

Heacock v. Macondray, 42 Phil 90, October 3, 1921

Shipper: HE Heacock Co. (plaintiff and appellant)

Common Carrier: Macondray & Co. (defendant and appellant)
Goods: four cases of merchandise, one of which contained twelve (12) 8-day Edmond Clocks,
properly boxed
Destination: New York to Manila
Condition: No delivery of one case which contained twelve (12) 8-day Edmond Clock

Facts:
Plaintiff Heacock caused to deliver the four cases of merchandise on board in the steamship
Bolton Castle. In which one of which contained twelve (12) 8-day Edmond Clocks.
When the vessel arrived in the port of Manila, neither the master of the vessel nor the
defendant, as its agent, delivered to the plaintiff the one case of merchandise which
contained twelve (12) 8-day Edmond Clocks,
Lower Court: in favor of Plaintiff; Ruled in accordance with clause 9 of the Bill of Lading;
defendant is ordered to pay P226.02, this being the invoice value of the clocks in question
plus freight and insurance, with legal interest
Both parties appealed
Other important facts of the case:
1. the market value of the merchandise in city of New York was P22 and in the Manila was
P420.
2. The bill of lading issued and delivered to the plaintiff by the master of the said steamship
Bolton Castle contained, among others, the following clauses:

1. It is mutually agreed that the value of the goods receipted for above does not exceed
$500 per freight ton, or, in proportion for any part of a ton, unless the value be expressly
stated herein and ad valorem freight paid thereon.
9. Also, that in the event of claims for short delivery of, or damage to, cargo being made,
the carrier shall not be liable for more than the net invoice price plus freight and insurance
less all charges saved, and any loss or damage for which the carrier may be liable shall be
adjusted pro rata on the said basis.
3. The case containing the aforesaid twelve 8-day Edmond clocks measured 3 cubic feet, and
the freight ton value thereof was $1,480, U. S. currency.
4. No greater value than $500, U. S. currency, per freight ton was declared by the plaintiff
on the aforesaid clocks, and no ad valorem freight was paid thereon.
On or about October 9, 1919, the defendant tendered to the plaintiff P76.36, the proportionate
freight ton value of the aforesaid twelve 8-day Edmond clocks, in payment of plaintiff's claim,
which tender plaintiff rejected.

Issue: May a Common Carrier, by stipulations inserted in the bill of lading, limit its liability for
the loss of or damage to the cargo to an agreed valuation of the latter Yes.

Contentions of the parties:

1. The plaintiff-appellant insists that it is entitled to recover from the defendant the market
value of the clocks in question, to wit: the sum of P420. The defendant-appellant, on the
other hand, contends that, in accordance with clause 1 of the bill of lading, the plaintiff is
entitled to recover only the sum of P76.36, the proportionate freight ton value of the said
clocks.
2. The claim of the plaintiff is based upon the argument that the two clause in the bill of lading
above quoted, limiting the liability of the carrier, are contrary to public order and, therefore,
null and void. The defendant, on the other hand, contends that both of said clauses are valid,
and the clause 1 should have been applied by the lower court instead of clause 9.

Held:
1. Contents of the Bill of Lading (see clause 1 and clause 9)
2. Three kinds of stipulations often found in a bill of lading
Three kinds of stipulations have often been made in a bill of lading. The first is one
exempting the carrier from any and all liability for loss or damage occasioned by its own
negligence. The second is one
providing for an unqualified limitation of such liability to an agreed valuation. And the
third is one limiting the liability of the carrier to an agreed valuation unless the shipper
declares a higher value and pays a higher rate of freight.

According to an almost uniform weight of authority, the first and second kinds of
stipulations are invalid as being contrary to public policy, but the third is valid and
enforceable.

3. Authorities supporting invalidity of absolute exemption from liability and unqualified

limitation to an agreed valuation
The Harter Act (Act of Congress of 13 February 1893), Louisville Ry. Co. vs. Wynn (88 Tenn., 320),
and Galt vs. Adams Express Co. (4 McAr., 124; 48 Am. Rep., 742) support the proposition that
the first and second stipulations in a bill of lading are invalid which either exempt the carrier
from liability for loss or damage occasioned by its negligences or provide for an unqualified
limitation of such liability to an agreed valuation.

4. Hart vs. Pennsylvania RR Co.

In the case of Hart vs. Pennsylvania R. R. Co., it was held that where a contract of carriage, signed
by the shipper, is fairly made with a railroad company, agreeing on a valuation of the property
carried, with the rate of freight based on the condition that the carrier assumes liability only
to the extent of the agreed valuation, even in case of loss or damage by the negligence of the
carrier, the contract will be upheld as proper and lawful mode of recurring a due proportion
between the amount for which the carrier may be responsible and the freight he receives,
and protecting himself against extravagant and fanciful valuations.

St. Paul Fire & Marine Insurance Co. vs. Macondray & Co. Inc.
(What is to be paid; Art. 1233)

FACTS

On June, 1960, Winthrop Products, Inc. of New York, New York, USA shipped 218 cartons and
drums of drugs and medicines consigned to Winthrop-Steams, Inc., Manila, aboard SS Tai
Ping, owned and operated by Wilhelm Wilhelmsen.

Barber Steamship Lines Inc. issued Bill of Lading 34 (a document issued by a carrier which
details a shipment of merchandise and gives title of that shipment to a specified party.) in the
name of Winthrop Producs Inc. as shipper with arrival notice to Manila to consignee
Winthrop-Steams Inc. Manila. The shipment was insured by shipper against loss and/or
damage with St. Paul Fire& Marine Insurance Company under its insurance Special Policy.

Two months after, SS Tai Ping arrived at the Port of Manila and discharged shipment into the
custody of Manila Port Service, the arrastre contractor. Shipment was complete and in good
order except of 1 drum and several cartons which were in bad condition. Winthrop-Steams,
Inc. Manila upon failing to receive the whole shipment and as several cartons were in bad
condition, they filed a claim in the amount of P1,109.67 representing the CIF2 (Cost, Insurance,
and Freight) value of the damaged drum and cartons of medicine to Macondray & Co. Inc., and
Barber Steamship Lines Inc. and Manila Port Service. However, both refused to pay.

Winthrop-Steams Inc. also filed its claim with insurer St. Paul Fire & Marine Insurance Co. and
insurance company on the basis of the value of lost and damaged goods in the total amount of
$1,134.46. As subrogee3 of the rights of Winthrop-Steams Inc, St. Paul Fire & Marine Insurance
Co. instituted an action for recovery of $1,134.46 plus costs against Macondray & CO., INC.,
BARBER Steamship Lines, Inc.,Manila Port Service and/or Manila Railroad Company.

2
requires the seller to arrange and pay for delivery of the goods to a port or place of import in the country of
destination of the buyer.
3
The insurance company that assumes the legal right to collect the claim of an injured claimant (the subrogor)
against the third party that caused the injury, in return for paying the other's expenses in advance.
Manila Port Service and Manila Railroad Company: (no, you cannot collect from us) resisted
action contending that the whole cargo was delivered to consignee Winthrop Steams Inc.
Manila in the same condition in which it received from carrying vessel and that their liability is
limited to the invoice value goods of not more than P500 per package pursuant to
Management Contract.

Macondray & Co, Inc., Barber Steamship Lines Inc., and Wilhelm Wilhelmsen contested as well
the claim alleging that:
-their liability for shipment ceased upon the discharge of package from ship's tackle
-are also not agents of the vessel (together with Manila Port Service)
-218 packages were discharged from SS Tai Ping into the custody of Manila Port Service as
operator and if any damage was sustained while it was under SS Tai Ping, damage was caused
by the insufficiency of packing, force majeure and/or perils of the sea
-offers to settle the claim of Winthrop-Steams Inc.by paying the CIF value of 27 lbs. Caramel,
4.13 kls methyl salicylate and 12 pcs pharmaceutical vials only in good faith
Winthrop-Steams Inc however rejected the offer.

Lower Court: rendered judgment ordering:

Macondray & Co, Barber Steamship Lines, Inc and Wilhelm Wilhelmsen to pay Winthrop-
Steams Inc jointly and severally the sum of P300 with legal interest from filing of
complaint until fully paid
Manila Railroad and Manila Port Service to pay Winthrop-Steams Inc jointly and
severally P809.67 with legal interest plus costs.

Winthrop-Steams Inc filed a motion of reconsideration contending that it also should recover
$1, 134.46 (value of the lost and damaged goods) but lower court denied.

Hence present petition. (You can stop until here for the facts tho)

St. Paul Fire & Marine Insurance Company argues:

-it should also recover from Macondray & Co, Barber Steamship Lines Inc., Manila Port Service,
and Manila Railroad $1,134.46 because they paid in full amount to Winthrop-Steams Inc

Macondray & Co., et.al, countered:

-liability is limited to CIF (Cost, Insurance, Freight) value of the goods pursuant to the contract of
sea carriage in the Bill of Lading
-Winthrop-Steams Inc.'s claim was only for P1,109.67
-they are not insurers of goods and should not be made to pay the insured value
-exchange rate should be based on rate on the delivery of goods and not at the time lower court
rendered its decision.

ISSUE/S
1. Whether in case of loss or damage, liability of the carrier is limited to the CIF value of
goods that were lost or damaged
 2. Whether insurer (St. Paul Fire & Marine Insurance Company) who paid claim in dollars to
Winthrop-Steams Inc should be reimbursed in peso equivalent on date of discharge or
on date of decision

HELD

Appeal is without merit.

1. Yes, liability is limited only to CIF value of lost goods.

As provided in the Bill of Lading for the rights and liabilities of parties in reference to contract to
carry, liability is limited to the value of the goods appearing in the bill is valid and binding. The
limitation of carrier's liability is sanctioned by the freedom of contracting parties to establish
such stipulations , clauses, terms, or conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs and public policy. Stipulation fixing or limiting the
sum that may be recovered from the carrier on the loss or deterioration of the goods is valid,
provided it is (a) reasonable and just under the circumstances, and (b) has been fairly and freely
agreed upon.

In the case at bar, liabilities of the defendants-appellees with respect to the lost or
damaged shipments are expressly limited to the C.I.F. value of the goods as per contract of sea
carriage embodied in the bill of lading:

"Whenever the value of the goods is less than $500 per package or other freight
unit, their value in the calculation and adjustment of claims for which the Carrier
may be liable shall for the purpose of avoiding uncertainties and difficulties in
fixing value be deemed to be the invoice value, plus freight and insurance if paid,
irrespective of whether any other value is greater or less.
"The limitation of liability and other provisions herein shall inure not only to the
benefit of the carrier, its agents, servants and employees, but also to the benefit
of any independent contractor performing services including stevedoring in
connection with the goods covered hereunder."

The ship (ambot unsay pangan sa ship) and Steamship Inc are therefore bound by the
stipulations since it is expressly stated that in accepting the Bill of lading, shipper, owner,
and consignee of goods and holder of bill of Lading all agree to be bound by stipulations,
exceptions and conditions whether written, stamped or printed as if they were signed by
shipper, owner, consignee or holder.
(Therefore ang gist is not more than P500 ra ang ma-collect ni Winthrop-Steams Inc dahil
nakasaad sa BoL)
2. Since St. Paul Fire & Marine Insurance company are subrogated merely to the rights of
the assured, it can only recover the amount that is recoverable by Winthrop-Steams Inc
as limited and restricted by the provisions of the Bill of Lading.
 "The insurer after paying the claim of the insured for damages under the insurance is
subrogated merely to the rights of the insured and therefore can necessarily recover only
that to what was recoverable by the insured."
Also, the contention of St. Paul Fire & Marine Insurance Company that it should be paid
according to the full amount in dollars it paid Winthrop-Steams Inc is of no moment (haha ka ew
sa of no moment).

The obligation of the carrier to pay for the damage commenced on the date it failed to deliver
the shipment in good condition to the consignee. The C.I.F. Manila value of the goods which were
lost or damaged, according to the claim of the consignee dated September 26, 1960 is $226.37
(for the pilferage, Exhibit "G") and $324.33 (shortlanded, Exhibit "H") or P456.14 and P653.53,
respectively, in Philippine Currency. The peso equivalent was based by the consignee on the
exchange rate of P2.015 to $1.00 which was the rate existing at that time. We find, therefore, that
the trial court committed no error in adopting the aforesaid rate of exchange.
(Gist is di dapat feelingero si St.Paul Fire &Marine Insurance Company na ma-reimbursean sha of
the full amount na iya gi pay kay Winthrop since si Winthrop bound by Bill of Lading, insurance
company is also bound by the said stipulation. Furthermore, hindi in dollars ang reimbursement
and should start on the date of filing of complaint. )

Sea-Land Service, Inc. v. Intermediate Appellate Court (153 SCRA 552 )

Post under case digests, Commercial Law at Thursday, February 23, 2012 Posted
by Schizophrenic Mind
Facts: Sea-Land, a foreign shipping and forwarding company licensed to do business in the
Philippines, received from Sea-borne Trading Company in California, a shipment consigned to Sen
Hiap Hing, the business name used by Cue. The shipper not having declared the value of the
shipment , no value was indicated in thebill of lading. The shipment was discharged in Manila,
and while awaiting transshipment to Cebu, the cargo was stolen and never recovered.

The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency
value of the lost cargo, P55, 814 for unrealized profit and P25,000 for attorneys fees. CA affirmed
the trial courts decision.

Issue: Whether or not Sea-Land is liable to pay Cue.

Held: There is no question of the right of a consignee in a bill of lading to recover from the carrier
or shipper for loss of, or damage to, goods being transported under said bill, although that
document may have been drawn up only by the consignor and the carrier without the
intervention of the consignee.

Since the liability of a common carrier for loss of or damage to goods transported by it under a
contract of carriage os governed by the laws of the country of destination and the goods in
question were shipped from the United States to the Philippines, the liability of Sea-Land has Cue
is governed primarily by the Civil Code, and as ordained by the said Code, supplementary, in all
matters not cluttered thereby, by the Code of Commerce and special laws. One of
these supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable
to all contracts for the carriage by sea to and from the Philippines Ports in Foreign
Trade by Comm. Act. 65.

Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation
clause in the bill of lading here are fully substantial on the basis alone of Article 1749 and 1750
of the Civil Code. The justices of such stipulation is implicit in its giving the owner or shipper the
option of avoiding accrual of liability limitation by the simple expedient of declaring the value of
the shipment in thebill of lading.

The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the
shipment covered by said rule to US$500 per package unless the shipper declares the value of
the shipment and pays additional charges is valid and binding on Cue.

CITADEL LINES INC. vs. COURT OF APPEALS and MANILA WINE MERCHANTS INC.
G.R. No. 88092, April 25, 1990, J. Regalado

I. Facts
Petitioner Citadel Lines, Inc. (carrier) is the general agent of the vessel Cardigan Bay/Strait
Enterprise. Respondent Manila Wine Merchants, Inc. (consignee) is the importer of the subject
shipment of Dunhill cigarettes from England. On March 17, 1979, the vessel loaded on board at
England 180 Filbrite cartons of mixed British manufactured cigarettes. The shipment arrived at
the Port of Manila Pier in container vans received by E. Razon Inc (arrastre). Due to lack of space,
the representatives of the carrier kept the cigarettes in containers, padlocked and sealed. The
next morning, the head checker of the carrier discovered that 90 cases of imported British
manufactured cigarettes were missing.
The consignee sought to recover from the carrier the market value of the missing cargoes
in the amount of Php 315,000 but the carrier argued that the arrastre operator should be held
liable as the incident occurred in an area absolutely under the control of the latter. The trial court
and the appellate court adjudged the carrier as the party liable for the loss of cargoes. Hence, the
present recourse by Citadel.

II. Issues
1. Whether the loss occurred while the cargo in question was in the custody of Citadel Lines

2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is
binding on the consignee

III. Ruling
1. Yes. On the basis of the evidence presented, further bolstered by the testimonies of Citadels
Claims Manager and Head Checker, the subject cargo which was placed in a container van,
padlocked and sealed by the representative of the carrier was still in its possession and control
when the loss occurred, there having been no formal turnover of the cargo to the arrastre.
Considering, therefore, that the subject shipment was lost while it was still in the custody of
herein petitioner carrier, and considering further that it failed to prove that the loss was
occasioned by an excepted cause, the inescapable conclusion is that the carrier was negligent
and should be held liable therefor.

2. Yes. Basic is the rule, long since enshrined as a statutory provision, that a stipulation limiting
the liability of the carrier to the value of the goods appearing in the bill of lading, unless the
shipper or owner declares a greater value, is binding. Further, a contract fixing the sum that
may be recovered by the owner or shipper for the loss, destruction or deterioration of the
goods is valid, if it is reasonable and just under the circumstances, and has been fairly and
freely agreed upon. The consignee itself admitted in its memorandum that the value of the
goods shipped does not appear in the bills of lading. Hence, the stipulation on the carrier's
limited liability applies. Petitioner was ordered to pay respondent the sum of US$4,465.60.

Everett Steamship Corporation vs. CA

G.R. No.122494, October 8, 1998

PARTIES:
Everett Steamship Corporation, petitioner
Court of Appeals and Hernandez Trading Co. Inc., respondents

BRIEF STATEMENT OF THE CASE:

Validity of the Bill of lading in a contract of carriage

BRIEF STATEMENT OF THE FACTS:

Private respondent imported 3 crates of bus spare parts marked as MARCO C/No. 12, MARCO
C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading Company, Ltd. (Maruman
Trading), a foreign corporation based in Inazawa, Aichi, Japan. The crates were shipped from
Nagoya, Japan to Manila on board "ADELFAEVERETTE," a vessel owned by petitioner's principal,
Everett Orient Lines. Upon arrival at the port of Manila, it was discovered that the crate marked
MARCO C/No. 14 was missing. Private respondent claim upon petitioner for the value of the lost
cargo amounting to One Million Five Hundred Fifty Two Thousand Five Hundred (Y1, 552,500.00)
Yen, the amount shown in an Invoice No. MTM-941, dated November 14, 1991. However,
petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximum amount
stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner.
Private respondent rejected the offer and thereafter instituted a suit for collection. The trial court
rendered a decision in favour of the private respondents and this was affirmed by the Court of
Appeals. Thus, this instant petition.

ISSUES:
1. Is the petitioner liable for the actual value and not the maximum value recoverable under
the bill of lading?
2. Is private respondent, as consignee, who is not a signatory to the bill of lading bound by
the stipulations thereof?

ARGUMENTS:
1. The Petitioner is only liable for the maximum value recoverable under the bill of lading.

Clause 18 of the covering bill of lading:

18. All claims for which the carrier may be liable shall be adjusted and settled on
the basis of the shipper's net invoice cost plus freight and insurance premiums, if
paid, and in no event shall the carrier be liable for any loss of possible profits or
any consequential loss.

The carrier shall not be liable for any loss of or any damage to or in any connection
with, goods in an amount exceeding One Hundred thousand Yen in Japanese
Currency (Y100,000.00) or its equivalent in any other currency per package or
customary freight unit (whichever is least) unless the value of the goods higher
than this amount is declared in writing by the shipper before receipt of the goods
by the carrier and inserted in the Bill of Lading and extra freight is paid as required.
(Emphasis supplied)

Pertinent provisions that is applicable as to this case:

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been freely and fairly agreed upon.
Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the
common carrier's liability for loss must be "reasonable and just under the circumstances, and has
been freely and fairly agreed upon."

The above stipulations are reasonable and just. In the bill of lading, the carrier made it clear that
its liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper,
Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher
than the limited liability of the carrier. Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with the stipulations.

2. Private Respondents are still bound by the stipulations of the bill of lading

In Sea-Land Service, Inc. vs. Intermediate Appellate Court (supra), it was held that even if the
consignee was not a signatory to the contract of carriage between the shipper and the carrier,
the consignee can still be bound by the contract.

RULING:
The decision of the Court of Appeals is hereby REVERSED and SET ASIDE.

In fine, the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand
(Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading..

REGIONAL CONTAINER LINES G.R. No. 168151

(RCL) OF SINGAPORE and
EDSA SHIPPING AGENCY,
Present:
Petitioners,

QUISUMBING, J., Chairperson,

CARPIO-MORALES,
- versus - BRION,
DEL CASTILLO, and
ABAD, JJ.

THE NETHERLANDS INSURANCE CO.

(PHILIPPINES), INC.,
Respondent. Promulgated:
 September 4, 2009
x -------------------------------------------------------------------------------------- x

DECISION

BRION, J.:

For our resolution is the petition for review on certiorari filed by petitioners Regional
Container Lines of Singapore (RCL) and EDSA Shipping Agency (EDSA Shipping) to annul and set
aside the decision[1] and resolution[2] of the Court of Appeals (CA) dated May 26, 2004 and May
10, 2005, respectively, in CA-G.R. CV No. 76690.

RCL is a foreign corporation based in Singapore. It does business in the Philippines through its
agent, EDSA Shipping, a domestic corporation organized and existing under Philippine laws.
Respondent Netherlands Insurance Company (Philippines), Inc. (Netherlands Insurance) is
likewise a domestic corporation engaged in the marine underwriting business.

FACTUAL ANTECEDENTS

The pertinent facts, based on the records are summarized below.

On October 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to be shipped
from Singapore to Manila for Temic Telefunken Microelectronics Philippines(Temic). U-Freight
Singapore PTE Ltd.[3] (U-Freight Singapore), a forwarding agent based in Singapore, contracted
the services of Pacific Eagle Lines PTE. Ltd. (Pacific Eagle) to transport the subject cargo. The cargo
was packed, stored, and sealed by Pacific Eagle in its Refrigerated Container No. 6105660 with
Seal No. 13223. As the cargo was highly perishable, the inside of the container had to be kept at
a temperature of 0 Celsius. Pacific Eagle then loaded the refrigerated container on board the M/V
Piya Bhum, a vessel owned by RCL, with which Pacific Eagle had a slot charter agreement. RCL
duly issued its own Bill of Lading in favor of Pacific Eagle.

To insure the cargo against loss and damage, Netherlands Insurance issued a Marine Open
Policy in favor of Temic, as shown by MPO-21-05081-94 and Marine Risk Note MRN-21 14022, to
cover all losses/damages to the shipment.

On October 25, 1995, the M/V Piya Bhum docked in Manila. After unloading the refrigerated
container, it was plugged to the power terminal of the pier to keep its temperature
constant. Fidel Rocha (Rocha), Vice-President for Operations of Marines Adjustment Corporation,
accompanied by two surveyors, conducted a protective survey of the cargo. They found that
based on the temperature chart, the temperature reading was constant from October 18, 1995
to October 25, 1995 at 0 Celsius. However, at midnight of October 25, 1995 when the cargo had
already been unloaded from the ship the temperature fluctuated with a reading of 33 Celsius.
Rocha believed the fluctuation was caused by the burnt condenser fan motor of the refrigerated
container.

On November 9, 1995, Temic received the shipment. It found the cargo completely
damaged. Temic filed a claim for cargo loss against Netherlands Insurance, with supporting claims
documents. The Netherlands Insurance paid Temic the sum of P1,036,497.00 under the terms of
the Marine Open Policy. Temic then executed a loss and subrogation receipt in favor of
Netherlands Insurance.

Seven months from delivery of the cargo or on June 4, 1996, Netherlands Insurance filed a
complaint for subrogation of insurance settlement with the Regional Trial Court, Branch 5,
Manila, against the unknown owner of M/V Piya Bhum and TMS Ship Agencies (TMS), the latter
thought to be the local agent of M/V Piya Bhums unknown owner.[4]The complaint was docketed
as Civil Case No. 96-78612.

Netherlands Insurance amended the complaint on January 17, 1997 to implead EDSA
Shipping, RCL, Eagle Liner Shipping Agencies, U-Freight Singapore, and U-Ocean (Phils.), Inc. (U-
Ocean), as additional defendants. A third amended complaint was later made, impleading Pacific
Eagle in substitution of Eagle Liner Shipping Agencies.

TMS filed its answer to the original complaint. RCL and EDSA Shipping filed their answers with
cross-claim and compulsory counterclaim to the second amended complaint. U-Ocean likewise
filed an answer with compulsory counterclaim and cross-claim. During the pendency of the case,
U-Ocean, jointly with U-Freight Singapore, filed another answer with compulsory counterclaim.
Only Pacific Eagle and TMS filed their answers to the third amended complaint.

The defendants all disclaimed liability for the damage caused to the cargo, citing several reasons
why Netherland Insurances claims must be rejected. Specifically, RCL and EDSA Shipping denied
negligence in the transport of the cargo; they attributed any negligence that may have caused
the loss of the shipment to their co-defendants. They likewise asserted that no valid subrogation
exists, as the payment made by Netherlands Insurance to the consignee was invalid. By way of
affirmative defenses, RCL and EDSA Shipping averred that the Netherlands Insurance has no
cause of action, and is not the real party-in-interest, and that the claim is barred by
laches/prescription.

After Netherlands Insurance had made its formal offer of evidence, the defendants
including RCL and EDSA Shipping sought leave of court to file their respective motions to dismiss
based on demurrer to evidence.
RCL and EDSA Shipping, in their motion, insisted that Netherlands Insurance had (1) failed to
prove any valid subrogation, and (2) failed to establish that any negligence on their part or that
the loss was sustained while the cargo was in their custody.

On May 22, 2002, the trial court handed down an Order dismissing Civil Case No. 96-78612 on
demurrer to evidence. The trial court ruled that while there was valid subrogation, the
defendants could not be held liable for the loss or damage, as their respective liabilities ended at
the time of the discharge of the cargo from the ship at the Port of Manila.

Netherlands Insurance seasonably appealed the order of dismissal to the CA.

On May 26, 2004, the CA disposed of the appeal as follows:

WHEREFORE, in view of the foregoing, the dismissal of the complaint against

defendants Regional Container Lines and Its local agent, EDSA Shipping Agency,
is REVERSED and SET ASIDE. The dismissal of the complaint against the other
defendants is AFFIRMED. Pursuant to Section 1, Rule 33 of the 1997 Rules of Civil
Procedure, defendants Regional Container Lines and EDSA Shipping Agency are
deemed to have waived the right to present evidence.

As such, defendants Regional Container Lines and EDSA Shipping Agency are ordered
to reimburse plaintiff in the sum of P1,036,497.00 with interest from date
hereof until fully paid.
No costs.

SO ORDERED. [Emphasis supplied.]

The CA dismissed Netherland Insurances complaint against the other defendants after finding
that the claim had already been barred by prescription.[5]

Having been found liable for the damage to the cargo, RCL and EDSA Shipping filed a motion for
reconsideration, but the CA maintained its original conclusions.

The sole issue for our resolution is whether the CA correctly held RCL and EDSA Shipping liable
as common carriers under the theory of presumption of negligence.

THE COURTS RULING

The present case is governed by the following provisions of the Civil Code:
ART. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them according to all
the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in articles
1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the
safety of the passengers is further set forth in articles1755 and 1756.

ART. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following causes
only:

1) Flood, storm, earthquake, lightning, or other natural disaster or

calamity;
2) Act of the public enemy in war, whether international or civil;
3) Act of omission of the shipper or owner of the goods;
4) The character of the goods or defects in the packing or in the
containers;
5) Order or act of competent public authority.

ART. 1735. In all cases other that those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding
article, if the goods are lost, destroyed, or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as required by article 1733.

ART. 1736. The extraordinary responsibility of the common carrier lasts from the time
the goods are unconditionally placed in the possession of, and received by the
carrier for transportation until the sane are delivered, actually or constructively,
by the carrier to the consignee, or to the person who has a right to receive
them, without prejudice to the provisions of articles 1738.

ART. 1738. The extraordinary liability of the common carrier continues to be operative
even during the time the goods are stored in a warehouse of the carrier at the
place of destination, until the consignee has been advised of the arrival of the
goods and has had reasonable opportunity thereafter to remove them or
otherwise dispose of them.

ART. 1742. Even if the loss, destruction, or deterioration of the goods should be caused
by the character of the goods, or the faulty nature of the packing or of the
 containers, the common carrier must exercise due diligence to forestall or lessen
the loss.

In Central Shipping Company, Inc. v. Insurance Company of North America,[6] we reiterated the
rules for the liability of a common carrier for lost or damaged cargo as follows:

(1) Common carriers are bound to observe extraordinary diligence over the goods
they transport, according to all the circumstances of each case;
(2) In the event of loss, destruction, or deterioration of the insured goods, common
carriers are responsible, unless they can prove that such loss, destruction, or
deterioration was brought about by, among others, flood, storm, earthquake,
lightning, or other natural disaster or calamity; and
(3) In all other cases not specified under Article 1734 of the Civil Code, common
carriers are presumed to have been at fault or to have acted negligently, unless
they observed extraordinary diligence.[7]
In the present case, RCL and EDSA Shipping disclaim any responsibility for the loss or
damage to the goods in question. They contend that the cause of the damage to the cargo was
the fluctuation of the temperature in the reefer van, which fluctuation occurred after the cargo
had already been discharged from the vessel; no fluctuation, they point out, arose when the
cargo was still on board M/V Piya Bhum. As the cause of the damage to the cargo occurred after
the same was already discharged from the vessel and was under the custody of the arrastre
operator (International Container Terminal Services, Inc. or ICTSI), RCL and EDSA Shipping posit
that the presumption of negligence provided in Article 1735 of the Civil Code should not
apply. What applies in this case is Article 1734, particularly paragraphs 3 and 4 thereof, which
exempts the carrier from liability for loss or damage to the cargo when it is caused either by an
act or omission of the shipper or by the character of the goods or defects in the packing or in the
containers. Thus, RCL and EDSA Shipping seek to lay the blame at the feet of other parties.

We do not find the arguments of RCL and EDSA Shipping meritorious.

A common carrier is presumed to have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported.[8] When the goods shipped are either lost
or arrived in damaged condition, a presumption arises against the carrier of its failure to observe
that diligence, and there need not be an express finding of negligence to hold it liable. [9]

To overcome the presumption of negligence, the common carrier must establish by

adequate proof that it exercised extraordinary diligence over the goods. It must do more than
merely show that some other party could be responsible for the damage. [10]

In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree of
diligence required by law over the goods they transported. Indeed, there is sufficient evidence
showing that the fluctuation of the temperature in the refrigerated container van, as recorded in
the temperature chart, occurred after the cargo had been discharged from the vessel and was
already under the custody of the arrastre operator, ICTSI. This evidence, however, does not
disprove that the condenser fan which caused the fluctuation of the temperature in the
refrigerated container was not damaged while the cargo was being unloaded from the ship. It is
settled in maritime law jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier;[11] RCL and EDSA Shipping failed to dispute this.

RCL and EDSA Shipping could have offered evidence before the trial court to show that the
damage to the condenser fan did not occur: (1) while the cargo was in transit; (2) while they were
in the act of discharging it from the vessel; or (3) while they were delivering it actually or
constructively to the consignee. They could have presented proof to show that they exercised
extraordinary care and diligence in the handling of the goods, but they opted to file a demurrer
to evidence. As the order granting their demurrer was reversed on appeal, the CA correctly
ruled that they are deemed to have waived their right to present evidence, [12] and the
presumption of negligence must stand.

It is for this reason as well that we find RCL and EDSA Shippings claim that the loss or damage to
the cargo was caused by a defect in the packing or in the containers. To exculpate itself from
liability for the loss/damage to the cargo under any of the causes, the common carrier is
burdened to prove any of the causes in Article 1734 of the Civil Code claimed by it by a
preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted to the
shipper to prove that the carrier is negligent.[13] RCL and EDSA Shipping, however, failed to satisfy
this standard of evidence and in fact offered no evidence at all on this point; a reversal of a
dismissal based on a demurrer to evidence bars the defendant from presenting evidence
supporting its allegations.

WHEREFORE, we DENY the petition for review on certiorari filed by the Regional Container Lines
of Singapore and EDSA Shipping Agency. The decision of the Court of Appeals dated May 26,
2004 in CA-G.R. CV No. 76690 is AFFIRMED IN TOTO. Costs against the petitioners.
SO ORDERED.

MINDANAO TERMINAL and BROKERAGE vs. PHOENIX ASSURANCE

GR No. 162467 May 8, 2009
TOPIC: Breach of Obligations

FACTS:
- Del Monte Philippines contracted petitioner Mindanao Terminal and Brokerage Service,
Inc, a stevedoring company, to load and stow a shipment of 146,288 cartons of fresh
green Bananas and 15,202 cartons of fresh pineapples belonging to Del Monte Produce
into the cargo hold of the vessel M/v Mistrau
- The vessel was docked at the port of Davao and goods were to be transported to Incheon,
Korea in favour of consignee Taegu Industries.
 - Del Monte Produce insured the shipment under an open cargo policy with private
respondent Phoenix Assurance Company of New York, a non-life insurance company, and
private respondent McGee & Co, the underwriting manager/agent of Phoenix
- Upon arrival of M/V Mistrau in Incheon, it was discovered upon discharge that some of
the cargo was in bad condition
- The damage surveyor of Korea, Byeong, surveyed that 16,069 cartons of the banana
shipment and 2,185 cartons of the pineapple shipment were so damaged that they no
longer had commercial value.
- Del Monte Produce filed a claim under the open cargo policy. McGees Marine Claims
evaluated the claim and recommended that payment in the amount of $210,266.43 be
made. Del Monte issued a subrogation receipt to Phoenix and McGee.
- Phoenix and McGee instituted an action for damages against Mindanao Terminal
- RTC ruled that the only participation of Mindanao Terminal was to load the cargoes on
board the vessel and signed the foremans report unless they were properly arranged and
tightly secured to withstand voyage across the open seas.
o It was found that the cargoes were damages on account of a typhoon which M/V
Mistrau had encountered during the voyage.
o It was held that Phoenix and McGee had no cause of action against Mindanao
Terminal because the latter, whose services were contracted by Del Monte, a
distinct corporation from Del Monte Produce, had no contract with the assured
Del Monte Produce.
- CA reversed the RTCs decision which sustained Phoenixs and McGees argument that
the damage in the cargoes was the result of the improper stowage by Mindanao Terminal.
It imposed on Mindanao Terminal, as the stevedore of the cargo, the duty to exercise
extraordinary diligence in loading and stowing the cargoes.
- It further held that even with the absence of a contractual relationship between
Mindanao Terminal and Del Monte Produce, the cause of action of Phoenix and McGee
could be based on quasi-delict under Article 2176 of the Civil Code.

ISSUE:
- Whether or not Mindanao Terminal was careless and negligent in the loading and
stowage of the cargoes onboard M/V Mistrau making it liable for damages?
- Whether Phoenix and McGee has a cause of action against Mindanao Terminal under CC
2176 on quasi-delict?
- Whether Mindanao Terminal observed the degree of diligence required by law of a
stevedoring company?

RULING:
- The company filed by Phoenix and McGee against Mindanao Terminal states a cause of
action.
- The present action is based on quasi-delict, arising from the negligent and careless loading
and stowing of the cargoes belonging to Del Monte Produce. Even assuming that both
 Phoenix and McGee have only been subrogated in the rights of Del Monte Produce, who
is not a party to the contract of service between Mindanao Terminal and Del Monte, still
the insurance carriers may have a cause of action in light of the Courts consistent ruling
that the act that breaks the contract may be also a tort.
- In fine, a liability for tort may arise even under a contract, where tort is that which
breaches the contract
- In the present case, Phoenix and McGee are not suing for damages for injuries arising
from the breach of the contract of service but from the alleged negligent manner by which
Mindanao Terminal handled the cargoes belonging to Del Monte Produce. Despite the
absence of contractual relationship between Del Monte Produce and Mindanao Terminal,
the allegation of negligence on the part of the defendant should be sufficient to establish
a cause of action arising from quasi-delict.
- Article 1173 of the Civil Code is very clear that if the law or contract does not state the
degree of diligence which is to be observed in the performance of an obligation then that
which is expected of a good father of a family or ordinary diligence shall be required.
- Mindanao Terminal, a stevedoring company which was charged with the loading and
stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had acted merely as a
labor provider in the case at bar. There is no specific provision of law that imposes a higher
degree of diligence than ordinary diligence for a stevedoring company or one who is
charged only with the loading and stowing of cargoes.
- It was neither alleged nor proven by Phoenix and McGee that Mindanao Terminal was
bound by contractual stipulation to observe a higher degree of diligence than that
required of a good father of a family. We therefore conclude that following Article 1173,
Mindanao Terminal was required to observe ordinary diligence only in loading and
stowing the cargoes of Del Monte Produce aboard M/V Mistrau.
- Mindanao Terminal, as a stevedore, was only charged with the loading and stowing of the
cargoes from the pier to the ships cargo hold; it was never the custodian of the shipment
of Del Monte Produce.
- The loading and stowing of cargoes would not have a far reaching public ramification as
that of a common carrier and a warehouseman; the public is adequately protected by our
laws on contract and on quasi-delict.
- The public policy considerations in legally imposing upon a common carrier or a
warehouseman a higher degree of diligence is not present in a stevedoring outfit which
mainly provides labor in loading and stowing of cargoes for its clients.
- Phoenix and McGee failed to prove by preponderance of evidence that Mindanao
Terminal had acted negligently. 1avvphi1
- Phoenix and McGee relied heavily on the deposition of Byeong Yong Ahn and on the
survey report of the damage to the cargoes. Byeong, whose testimony was refreshed by
the survey report, found that the cause of the damage was improper stowage due to the
manner the cargoes were arranged
- As admitted by Phoenix and McGee in their Comment before us, the latter is merely a
stevedoring company which was tasked by Del Monte to load and stow the shipments of
fresh banana and pineapple of Del Monte Produce aboard the M/V Mistrau.
- How and where it should load and stow a shipment in a vessel is wholly dependent on the
shipper and the officers of the vessel.
- we are of the opinion that damage occurred aboard the carrying vessel during sea transit,
being caused by ships heavy rolling and pitching under boisterous weather while
proceeding from 1600 hrs on 7th October to 0700 hrs on 12th October, 1994 as described
in the sea protest.
- As it is clear that Mindanao Terminal had duly exercised the required degree of diligence
in loading and stowing the cargoes, which is the ordinary diligence of a good father of a
family, the grant of the petition is in order.